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President Joe Biden is expected to propose a number of tax increases in the first major federal tax hike in nearly 30 years to pay for the long-term economic program that will follow the COVID-19 response bill, according to a new report.
Sources reportedly told Bloomberg that provisions currently under consideration include raising the corporate tax rate to 28 percent from 21 percent; paring back tax preferences for so-called pass-through businesses, such as limited-liability companies or partnerships; increasing the income tax rate on individuals earning more than $400,000; expanding the estate tax; and a higher capital-gains tax rate for individuals earning at least $1 million annually.
An analysis by the Tax Policy Center of Biden’s campaign tax plan estimated it would raise $2.1 trillion over ten years.
The next economic plan is expected to be larger than the $1.9 trillion COVID-19 relief bill that Biden signed into law last week after it passed Congress with zero Republican support.
Treasury Secretary Janet Yellen has warned that unlike the first bill, which relied upon government debt as funding, that at least part of the future provision will need to be paid for.
The White House has yet to unveil the new program, which it has said would follow the signing of the COVID-19 response bill. It could cost between $2 trillion and $4 trillion, the report says.
It could prove difficult for Democrats to find the support of ten Senate Republicans that would be needed to move the measure forward.
Senate Minority Leader Mitch McConnell said last month that lawmakers would “have a big robust discussion about the appropriateness of a big tax increase.”
However, a number of tax initiatives could receive Republican support, including a move from a gasoline tax to a vehicle-miles-traveled fee to help fund highway projects as well as efforts to revise tax laws that don’t go far enough in keeping U.S. companies from moving jobs and profits offshore as another way to raise revenue.
If the tax measures were to pass, they would likely take effect next year. However, some lawmakers have urged the president to hold off on any tax hikes while unemployment remains high due to the pandemic.